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The Impact of Trade Diversity and Trading Partners on Domestic Economic Growth

Author

Listed:
  • Kim, Taegi

    (Chonnam National University)

  • Park, Kuseung

    (Chonnam National University)

Abstract

This paper studies the effects of trade diversity and trading partners on domestic economic growth for 69 countries during the period 1970~2000. We develop the index to measure trade diversity by using Herfindahl index and intra-industry trade index, and also calculate weighted average growth rate of trading partners using bilateral trade volume as weights. In addition, the variables, such as growth rate of investment, rate of inflation, and openness are included in regression analysis. The results show that trade affects economic growth; the economic growth rates are high in countries with high openness, the more commodity variety of exports and imports, the more variety of trading partners, and the high economic growth of trading partners. This paper suggests policy implications that we have to diversify trading commodities and trading partners as well as increase trade volume in order to maximize the positive effects of trade on economic growth.

Suggested Citation

  • Kim, Taegi & Park, Kuseung, 2006. "The Impact of Trade Diversity and Trading Partners on Domestic Economic Growth," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 10(1), pages 29-56, June.
    • Handle: RePEc:ris:eaerev:0167
    DOI: 10.11644/KIEP.JEAI.2006.10.1.151
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    Cited by:

    1. Jinsoo Lee & Bok-Keun Yu, 2018. "The Effects of Export Diversification on Macroeconomic Stabilization : Evidence from Korea," Working Papers 2018-25, Economic Research Institute, Bank of Korea.
    2. Lee, Jinsoo & Yu, Bok-Keun, 2019. "The Effects of Export Diversification on Macroeconomic Stabilization: Evidence from Korea," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 41(1), pages 1-14.

    More about this item

    Keywords

    Trade Diversity; Trading Partners; Openness; Economic Growth;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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